NG2 cells (also known as polydendrocytes) are a population of CNS cells that are distinct from neurons, mature oligodendrocytes, astrocytes and microglia. They can be identified by the expression of the proteoglycan NG2, have a highly branched morphology and are distributed throughout the grey and white matter. They differentiate into oligodendrocytes in vitro and have often been equated with oligodendrocyte precursor cells. However, whether polydendrocytes are multipotential cells that can give rise to neurons and astrocytes as well as oligodendrocytes is now highly debated. Furthermore, electrophysiological studies indicate that polydendrocytes receive synaptic input from neurons, suggesting that they are integrated in the neural network. This Review highlights recent findings and unresolved questions related to the lineage and function of polydendrocytes in the CNS.